Is The Senate Financial Reform Bill Any Good?

Senate Democrats were joined by four Republicans Thursday night to
pass a sweeping financial regulatory reform bill. It isn't law quite
yet--it still has to be merged with the House bill, which was passed in
December, and then signed by President Obama. But the prospects are
good. So it's worth asking, how good is this bill?

Liberals Not So Happy The American Prospect's Tim Fernholz assesses, "While this legislation is
undoubtedly stronger than many observers
anticipated and a major step towards reform, it has also left some
progressives with a bitter taste in their mouths -- notably Cantwell and
Feingold, who opposed the bill -- but also Senator Ted Kaufman,
whose amendment to cap the size of the banks was defeated early."

Worth
The Compromises Economist Edmund Andrews approves.
"For all its compromises and omissions and special exceptions, this is a
strong bill that will make life a lot less free-wheeling and lucrative
for the big banks and, with a little perserverence, a lot safer for
consumers and the economy as a whole. This is a victory for the good
guys." He urges us to "appreciate how much the Senate bill actually does
accomplish and how difficult it is to do anything at all when the full
force of the financial industry is against you."

The Best We
Could Get The Guardian's Michael Tomasky sighs, "I
would have liked to have seen Sherrod Brown and Ted Kaufman's amendment
to break up the banks become part of the law as much as the next
liberal. But I also see that 30 years of aggressive deregulation,
powered in part by fierce conservative ideological and in another part
by millions of dollars the banking industry lavishes on Capitol Hill
(and presidential campaigns, very much including the incumbent's) isn't
going to be undone in two years."

'Sorta' Fixes
Too-Big-To-Fail The New Republic's Noam Scheiber goes
in-depth. The bill misses many hoped-for provisions to limit banks
from getting dangerously big. "And yet, perhaps unwittingly, the upshot
of financial reform will have been to make it costlier to be a big bank
relative to being a small or medium-sized bank—which is to say, it has
effectively taxed bigness

One
is a
provision authored by Blanche Lincoln, Chair of the Agriculture
Committee, which would require banks to divest much of their lucrative
derivates trading businesses. Regulators
across the board have panned this populist step as unfeasible and
impractical. But the measure has become the public option of financial
reform with progressives rallying to keep it in the final version.

The
other two provisions the White House opposes were included in the House
version. One sets up a $150 billion fund paid for by new fees on banks
that would help pay for the liquidation of financial institutions. A
similar $50 billion fund was removed in the Senate bill to smooth over
GOP objections that such a fund would only encourage future bailouts.
The second provision would exempt auto-dealers from oversight by the
newly created consumer protection agency. Republican Senator Sam
Brownback offered a similar amendment in the Senate but withdrew it
today which also killed an attached amendment by Democratic Senators
Jeff Merkley and Carl Levin on the “Volcker
Rule.”

This article is from the archive of our partner The Wire.

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